Republicans block small-business tax break on procedural vote

WASHINGTON -- One of the top items on President Obama’s to do list -- a 10% tax break for small businesses that make new hires -- got tangled in an election-year tax debate as Republicans led a filibuster to block the measure.

The legislation would have provided the tax credit to companies that hire new employees or otherwise expand their payrolls this year, a typically popular approach among the GOP. Republicans in the Senate did not necessarily object to the measure, but they protested Thursday after Democrats refused to allow votes on other amendments.

Sen. Mitch McConnell of Kentucky, the Republican leader, sought votes on other tax proposals, specifically one that would extend for another year the tax breaks from theGeorge W. Bush administration that expire in December.

Those Bush-era tax rates have taken center stage in the race for the White House as Obama pushed this week to keep low rates only on family incomes below $250,000. For earnings beyond that, Obama wants to allow the rates to rise to their levels during the Clinton administration, which would boost the top tax bracket from 35% to 39.6%.

Votes on the competing tax measures are expected later this month in both the House and Senate, launching a debate that will likely ripple through the August recess of campaigning.

“If the president has a proposal, we’ll be happy to send an intern down to the White House to pick it up,” said McConnell. “But we can’t vote on a speech.”

Democrats on Capitol Hill are hesitant to quickly hold votes on Obama’s proposal – and in fact are still drafting it -- even though polls show Americans support asking wealthier households to pay more. They conducted their own filibuster of McConnell’s offer as Obama is on the road, making his case for tax changes at campaign stops in critical swing states.

“The more people hear about the two sides, the better off we are,” said Sen. Charles E. Schumer (D-N.Y.).

In the meantime, the small-business tax break was blocked on a vote of 53 to 44 after the Senate failed to reach the 60-vote threshold to break the GOP-led filibuster. Two Republican senators, Scott Brown of Massachusetts and Dean Heller of Nevada -- who both have tough reelection campaigns this fall -- voted with Democrats. Democratic Sen. Joe Manchin III of West Virginia joined Republicans in voting no.

The measure would have provided a 10% tax credit, up to $500,000 on payrolls of $5 million, for businesses that make new hires or otherwise expand their payrolls.

The legislation also included a popular provision to allow companies to deduct 100% of certain investments in new equipment, rather than the standard 50%, for 2012.